USD/JPY Surges on Japanese Inflation Data and Divergent Policy Stance

The USD/JPY exchange rate rose by 0.56% on September 18, reaching $156.811 as of 23:10 ET.

This increase follows cooler-than-expected Japanese inflation data and policy rate divergence between the Federal Reserve and the Bank of Japan.

The Bank of Japan's decision to maintain a dovish stance despite Japan's core inflation falling below its two percent target reduced market expectations for aggressive rate hikes, leading traders to unwind long positions in the yen.

The greenback remains supported by the Federal Reserve's hawkish policy stance and upwardly revised interest rate projections, which have pushed U.S. Treasury yields higher and maintained a yield advantage for the dollar.